Investment in Renewables Is Burying Coal

By Ian Lowe

Politicians lobbying for more coal-fired power stations are defying the preference for renewables by both consumers and investors.

Last year the Australian government announced it had support for its proposed policy for the national electricity system. The package was clearly driven by political and economic issues. It did not respond adequately to climate change, but it was at least a coherent approach.

The water was then muddied by a fringe group of government backbenchers, who were attacked by descendants of the late John Monash for misusing his name. The self-styled Monash Forum wants the government to fund new coal-fired power stations. Their timing was dictated by the internal politics of the Coalition parties, but their statement coincided with the United Nations release of 2017 data.

Last year the world saw 100 GW of new solar power installed and 50 GW of wind. Total new capacity powered by all fossil fuels – coal, oil, gas and lignite – was about 70 GW, so it’s clear which way the world is moving. In the USA, the solar energy industry now employs more people than all fossil fuels combined.

It is also clear to independent financial analysts that coal has a very limited future. In March, Rio Tinto sold its last holdings in coal mining. That announcement marks an extraordinarily rapid transition in investors’ thinking. Only a year ago, the Australian National University was accused of putting green ideology ahead of fiscal responsibility when it decided to get rid of its investments in the coal industry. When Rio Tinto did the same, the silence from the financial media was deafening.

The move away from coal is partly driven by the Paris agreement, to which Australia is a signatory. Achieving the Paris target certainly means we should not build any new coal-fired power stations. It probably means that we should be phasing out some existing facilities before the end of their projected life.

The move also reflects the new economic reality. Building a new coal-fired power station would be a very risky investment. Independent assessment suggests that the cost of its electricity would be much higher than the clean alternatives, making it very unlikely the operation would be profitable.

The backbenchers’ proposal makes no sense economically, politically or environmentally. Incredibly, some of these politicians are still denying the science of climate change decades after it was established to the satisfaction of reputable scientific organisations and informed decision-makers. They also want to ignore the Paris agreement.

Given the speed at which Australian households are embracing solar energy, the proponents are also out of touch with the communities they should be representing.

A recent forum on future employment opportunities in Queensland forced me to review the shape of that state’s 2018 economy. Although there is still a widespread perception that Queensland is heavily reliant on mining and agriculture, those sectors now employ comparatively few people.

The Australian Bureau of Statistics groups together agriculture, forestry and fishing, the traditional primary industries. They now only employ about 57,000 people, less than 2.4% of the state’s workforce. Total employment in the mining industry is about the same, with less than half that number in the coal sector – and the vast majority of that small group are producing coking coal for export. The domestic steaming coal industry employs fewer than 3000 people in a total state workforce of 2.42 million (~0.1%). Altogether, mining, agriculture, forestry and fishing employ 4.7% of those working.

Manufacturing accounts for 7% of jobs and education 8%, with a similar figure for accommodation and food services. The largest sectors are construction and retail, each about 10%, and health care, now accounting for 14% of jobs. Like the country as a whole, Queensland now has a services economy.

That breakdown suggests some obvious priorities for governments trying to ensure work opportunities for our exponentially growing population. The health care sector is by far the biggest employer. We are clearly not training enough young people in that broad field, since increasing numbers of doctors, nurses and aged care workers are being recruited from overseas. We also need more teachers, especially in the fields of maths and science. Even the arts and recreation now employ nearly as many people as the mining industry.

Ian Lowe is Emeritus Professor of science, technology and society at Griffith University.